NextFin News - Israeli Prime Minister Benjamin Netanyahu declared on December 7, 2025, during a joint press conference with German Chancellor Friedrich Merz in Jerusalem, that the first phase of the ceasefire with Hamas-controlled Gaza has been completed and that the second, more definitive phase is imminent. Netanyahu underscored that following the return of the last hostage remains—a key component of the initial agreement—Israel expects to move swiftly into the next stage. This next phase, he emphasized, centers on fundamental changes in Gaza’s governance, specifically the disarmament of Hamas, which he sees as essential to securing lasting peace and security for Israel and the region.
Netanyahu articulated his opposition to a two-state solution, citing Gaza as having already been an autonomous Palestinian state used in attempts to destroy Israel. Instead, he advocates for a framework promoting broader peace with Arab states and peaceful coexistence with Palestinian neighbors, without establishing a hostile Palestinian state. U.S. President Donald Trump is scheduled to meet with Netanyahu later in December to discuss strategies towards ending Hamas’s rule in Gaza, signaling coordinated U.S.-Israeli engagement in the peace initiative.
Despite the ceasefire, the region remains volatile. Recent weeks saw a string of incidents including Israeli military strikes on Gaza and deadly clashes, underscoring the fragility of the truce. The United States has issued warnings about credible reports of potential Hamas attacks violating the ceasefire, illustrating persistent security concerns. Israeli officials have raised alarms over delays by Hamas in returning the bodies of hostages and accused the group of militarization, while Hamas blames logistical restrictions on its ability to comply, highlighting humanitarian and operational challenges in Gaza’s devastated landscape.
Netanyahu’s linkage of the ceasefire’s success to Hamas’s disarmament marks a significant pivot from a mere pause in hostilities to an active campaign aimed at restructuring Gaza’s security and political environment. This is reinforced by Israel’s retention of control over significant portions of Gaza and plans to install physical demarcations to prevent violations, exposing the complexities in enforcing and monitoring the ceasefire.
Analysis of these developments reveals a multi-layered conflict scenario where geopolitical, security, and humanitarian factors intersect. The first phase, predominantly focused on hostage return and limited ceasefire adherence, has served as a fragile stepping stone. The announced second phase potentially entails a far more challenging military and political confrontation underpinning a complete demilitarization strategy, which Netanyahu envisions as pivotal to Israel’s national security.
Economic impacts on Gaza and Israel are profound amid ongoing conflict and uncertainty. Gaza’s economy remains devastated with restricted access to aid, limited infrastructure, and disrupted trade, while Israel’s military expenditures and domestic security policies continue to strain fiscal resources. The involvement of external actors such as the United States and Germany underscores the international stakes in maintaining regional stability, which is critical to global diplomatic and economic interests.
Looking forward, the impending second phase of the ceasefire implementation carries significant implications. Should it proceed smoothly, it could mark a breakthrough in curbing Hamas’s militant capabilities and lead to a reconfigured security architecture in Gaza potentially involving Arab states’ participation as Netanyahu suggested. However, failure to achieve demilitarization may reignite hostilities, undermining fragile peace efforts and destabilizing broader Middle Eastern geopolitics.
The political alignment between U.S. President Donald Trump and Netanyahu’s anti-Hamas agenda may reinforce hardline approaches but also opens channels for intensified diplomacy. The complex task lies in balancing military objectives with humanitarian concerns and regional political realities, ensuring any transition avoids escalation of civilian suffering and further economic deterioration.
Netanyahu’s explicit rejection of a traditional two-state solution signals a strategic shift that could reshape Israeli-Palestinian dynamics for years. By aiming for a model of peace without a sovereign Palestinian state in Gaza, Israel is pushing for a nuanced, security-focused framework that aims to integrate Palestinian neighbors without empowering hostile governance structures. This approach will likely face resistance from Palestinian factions and complicate international negotiations but may reflect evolving realities on the ground.
In sum, Netanyahu’s announcement of the imminent second phase in the ceasefire signals a critical, high-stakes inflection point in the Gaza conflict. The success or failure of this phase will have far-reaching consequences for regional security, international diplomacy, and the humanitarian landscape, shaping the Middle East’s trajectory well into the future.
Explore more exclusive insights at nextfin.ai.
